Kasik Co. budgeted the following cash receipts and cash disbursements for the fi

Question

Kasik Co. budgeted the following cash receipts and cash disbursements for the first three months of next Cash Cash January300,000500,000 February 400,000 March $450,000 250,000 According to a credit agreement with the company's bank, Kasik promises to have a minimum cash balance of $30,000 at each month-end. In return, the bank has agreed that the company can borrow up to $150,000 at an annual interest rate of 12%, paid on the last day of each month. The interest is computed based on the beginning balance of the loan for the month. The company has a cash balance of $30,000 and a loan balance of $60,000 at January 1 Prepare monthly cash budgets for each of the first three months of next year. (Input all amounts as positive values except negative preliminary cash balance and repayment of loan to bank which should be indicated by a minus sign. Leave no cells blank be certain to enter "O wherever required. Omit the "$" sign in your response.) KASIK COMPANY Cash Budget For January, February, and March March (Click to select) (Click to select) Total cash available Click to select) (Cick to select) (Cick to select) (Click to select) (Click to select) (Cick to select) (Click to select) 4 MacBook Pro esc

Explanation / Answer

Interest expenses for January = $60,000*12% / 12 months * 1 month = $600

Interest expenses for February = $10,600*12% / 12 months * 1 month = $106

KASIK COMPANY Cash Budget For January, February and March January February March Opening balance $                                             30,000 $     30,000 $                                        69,294 Add: Cash receipts $                                           500,000 $ 300,000 $                                      400,000 Total cash available $                                           530,000 $ 330,000 $                                      469,294 Less: Cash disbursments $                                           450,000 $ 250,000 $                                      500,000 Less: Interest expenses $                                                   600 $           106 Preliminary cash balance $                                             79,400 $     79,894 $                                      (30,706) Additional loan (Loan repayment) $79,400 - $30,000 = ($49,400) $ (10,600) $30,000+$30,706 = $60,706 Ending cash balance $                                             30,000 $     69,294 $                                        30,000

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